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Washington Federal (WAFD) Rides on Higher Rates, Costs Rise
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Washington Federal, Inc.’s (WAFD - Free Report) efforts to diversify revenues, consistent growth in loan balances and rising interest rates are expected to support financials. However, steadily rising costs remain a key concern.
WAFD’s revenues witnessed a compound annual growth rate (CAGR) of 3.5% over the last six fiscal years (2016-2021). The upswing was largely driven by improving net loan balances, which saw a CAGR of 6.9% over the same period. Supported by the constant rise in loan demand and higher interest rates, the company’s top line is expected to improve.
Washington Federal has a robust balance sheet. As of Jun 30, 2022, Washington Federal had total debt worth $1.73 billion, and cash and cash equivalents worth $607.4 million. Nevertheless, its times interest earned ratio of 10.0 at the end of third-quarter fiscal 2022 reflects a sequential improvement. Given the decent earnings strength, the company is expected to continue meeting debt obligations in the near term, even if the economic situation worsens.
Since fiscal 2011, WAFD has been increasing its quarterly dividend on a regular basis, with the latest hike announced in January 2022. The bank also has a share repurchase plan in place. As of Jun 30, 2022, it had 3.73 million shares remaining under the buyback authorization. Given its earnings strength, it is expected to sustain efficient capital deployments.
Analysts are also optimistic regarding WAFD’s earnings prospects. The Zacks Consensus Estimate for the company’s fiscal 2022 earnings has moved 5.2% upward over the past 60 days.
Over the past year, shares of this Zacks Rank #2 (Buy) company have rallied 3.8% against the industry’s decline of 7.6%.
Image Source: Zacks Investment Research
However, persistently increasing operating expenses, mainly due to higher compensation and information technology costs, are expected to hurt the bottom line to some extent. Over the last six fiscal years (2016-2021), expenses have seen a CAGR of 7.1%.
Over the past year, shares of East West Bancorp have gained 4.4%, while that of Associated Banc-Corp have rallied 5.5%.
Over the past 30 days, the Zacks Consensus Estimate for East West Bancorp’s current-year earnings has been revised 7.9% upward, while the same for Zions has moved 11.8% north.
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Washington Federal (WAFD) Rides on Higher Rates, Costs Rise
Washington Federal, Inc.’s (WAFD - Free Report) efforts to diversify revenues, consistent growth in loan balances and rising interest rates are expected to support financials. However, steadily rising costs remain a key concern.
WAFD’s revenues witnessed a compound annual growth rate (CAGR) of 3.5% over the last six fiscal years (2016-2021). The upswing was largely driven by improving net loan balances, which saw a CAGR of 6.9% over the same period. Supported by the constant rise in loan demand and higher interest rates, the company’s top line is expected to improve.
Washington Federal has a robust balance sheet. As of Jun 30, 2022, Washington Federal had total debt worth $1.73 billion, and cash and cash equivalents worth $607.4 million. Nevertheless, its times interest earned ratio of 10.0 at the end of third-quarter fiscal 2022 reflects a sequential improvement. Given the decent earnings strength, the company is expected to continue meeting debt obligations in the near term, even if the economic situation worsens.
Since fiscal 2011, WAFD has been increasing its quarterly dividend on a regular basis, with the latest hike announced in January 2022. The bank also has a share repurchase plan in place. As of Jun 30, 2022, it had 3.73 million shares remaining under the buyback authorization. Given its earnings strength, it is expected to sustain efficient capital deployments.
Analysts are also optimistic regarding WAFD’s earnings prospects. The Zacks Consensus Estimate for the company’s fiscal 2022 earnings has moved 5.2% upward over the past 60 days.
Over the past year, shares of this Zacks Rank #2 (Buy) company have rallied 3.8% against the industry’s decline of 7.6%.
Image Source: Zacks Investment Research
However, persistently increasing operating expenses, mainly due to higher compensation and information technology costs, are expected to hurt the bottom line to some extent. Over the last six fiscal years (2016-2021), expenses have seen a CAGR of 7.1%.
Other Stocks to Consider
A couple of other top-ranked stocks from the same space are East West Bancorp (EWBC - Free Report) and Associated Banc-Corp (ASB - Free Report) . At present, EWBC sports a Zacks Rank #1 (Strong Buy), while ASB has a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past year, shares of East West Bancorp have gained 4.4%, while that of Associated Banc-Corp have rallied 5.5%.
Over the past 30 days, the Zacks Consensus Estimate for East West Bancorp’s current-year earnings has been revised 7.9% upward, while the same for Zions has moved 11.8% north.